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Stochastic Dominance and Demographic Policy Evaluation: A Critique


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  • Cordoba, Juan Carlos
  • Liu, Xiying


Stochastic dominance (SD) is commonly used to rank income distribution and assesssocial policies. The literature argues that SD is a robust criterion for policy evaluationbecause it requires minimal knowledge of the social welfare function. We argue that,on the contrary, SD is not a robust criterion. We do this by carefully introducing mi-crofoundations into a model by Chu and Koo (1990) who use SD to provide support tofamily-planning programs aiming at reducing the fertility of the poor. We show thatfertility restrictions are generally detrimental for both individual and social welfare inspite of the fact that SD holds. Our Â…findings are an application of the LucasÂ’Critique.

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Bibliographic Info

Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 36117.

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Date of creation: 14 Apr 2013
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Handle: RePEc:isu:genres:36117

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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
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Related research

Keywords: Fertility; Welfare; income distribution; children; demographic policies; one child policy; stochastic dominance.;

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